Wall Street Breakfast
Tech stocks recover, South Korea grants and Micron's Q3
Nasdaq, S&P snap 3-day losing streak as Nvidia rebounds (0:28), South Korea to start granting aid to chip manufacturers (3:20), and a Micron Q3 preview (4:55).
Episode transcripts: seekingalpha.com/wsb
Show links:
Nasdaq, S&P, Dow futures tick up after tech stocks recover
Asia markets mixed on hotter-than-expected Australian CPI data; eyes on U.S. inflation data
Exxon threatens to suspend French refinery if strike continues
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- Duration:
- 10m
- Broadcast on:
- 26 Jun 2024
- Audio Format:
- mp3
(upbeat music) - Good morning today is Wednesday, June 26th. I'm Raina Sherbel filling in for Julie Morgan. Nasdaq S&P snapped three-day losing streak as Nividia rebounds. South Korea to start granting aid to chip manufacturers and a Micron Q3 preview. US stocks on Tuesday ended mixed with losses in major retailers, countering a rebound in Nividia. The chip giants pull back from correction territory, help the benchmark S&P 500, and the tech heavy Nasdaq halt a three-day slide. Both gauges got a lift from an increase in Nividia after becoming the world's largest publicly listed firm a week ago and notching a record close. The tech giant stock fell over 12% in the next three trading sessions and marked a technical correction. The Dow on the other hand slipped 0.76%. Snapping a five-day win streak. The blue chip index was weighed down by Home Depot and Walmart. Since the S&P 500 scaled the historic 5,500 points level for the first time ever on June 20th, Wall Street's bull run has taken a bit of a breather as market participants have locked in their profits. Andrew Hecht, investing group leader of Hecht Commodity Report told Seeking Alpha that, quote, "Markets are sleepy going into the end of the second quarter, but we could see some window dressing before the end of this week. Bank of America analysts forecast that gold could climb to the 3,000 per ounce level over the coming 12 to 18 months on the back of Fed rate cuts. The significant events to watch over the coming days are Thursday's debate between the incumbent and former presidents and the PCE inflation data that gauge the Fed favors for monetary policy decisions." Investors this week will get more insight into global and U.S. consumer trends in the form of scheduled quarterly reports from three major companies, Global Economic Bellwether, FedEx, Memory Chipmaker, Micron, and the world's largest shoemaker, Nike. Traders also digested a busy economic calendar on Tuesday. The S&P core logic case-chiller's measure of U.S. home prices hit a new all-time high in April, though the upward trend decelerated slightly from May. The federal housing finance agency also reported an increase in home prices in April. Tuesday's numbers follow a three-course helping of data on the housing market last week that painted a picture of record home prices, a fall in new construction, and a supply glut of houses. Additionally, the conference board said, "Consumer confidence ticked down slightly in June for May." Asia-Pacific equity markets were mixed on Wednesday as investors shrugged off an unexpectedly high inflation rate in Australia, while the yen continued to thread near $160 per dollar, which previously prompted Japanese authorities to intervene in the currency markets. Domestic shares in Japan also continue to benefit from a weak yen, which boosts the profit outlook for Japan's export-heavy industries, although a further decline in the currency could spur another government intervention. Chinese authorities fail to allay market concerns about China's shaky economic recovery. Investors also continue to assess the outlook for China's EV manufacturers, as China called on the EU to scrap duties of up to 38% on its electric vehicles. South Korea will start to grant aid to chip manufacturers from its $26 trillion or $19 billion package from July to boost domestic semiconductor manufacturing reported Bloomberg News. The Korean government will expand tax incentives to eligible companies by another three years. It's also thinking of extending the scope of beneficiaries to include makers of chip materials, parts, and equipment producers, the US-1 South Korea, to curb the flow of equipment and technologies for making high-end logic and memory chips to China. SK Hynix and Samsung help make South Korea the world's largest producer of memory chips. The government is now investing $470 billion to set up a semiconductor mega-cluster outside Seoul, which will act as the center of its chip industry. China has set up a $344 billion yuan or $47.5 billion investment fund to boost its semiconductor industry. The investment push comes amid US curbs, aimed at restricting China's access to advanced chips and equipment, including those used for making AI products. Under the Chips Act, which aims to increase US semiconductor manufacturing and research, especially in advanced semiconductors, several companies have inked preliminary agreements with the US Department of Commerce to get funds. Intel was awarded nearly $20 billion in grants and loans, Micron Technology, $6.1 billion, Taiwan's semiconductor manufacturing with over $11.5 billion in grants and loans, and Samsung was granted just under $6.5 billion in grants. Micron, as we mentioned, will report Q3 results on Wednesday. Analysts are expecting the memory chip maker to beat Wall Street estimates, driven by increased AI exposure and higher-dram pricing. Micron is a big beneficiary of the rising artificial intelligence trend, which led to increasing demand for its high bandwidth memory chips or HBM chips, also known as AI memory. Earlier this year, the company's announcement of starting volume production of memory chips for use in NVIDIA's GPUs has fanned much optimism among investors. Since its Q2 results, the stock has grown over 40%. Overall, it's gained over 60%. Investors will also focus on the company's margin, along with Capex, as it raises spending on AI. In the last two years, Micron has beaten EPS estimates 75% of the time and revenue estimates 50% of the time. Seeking Alpha analysts and Wall Street are bullish and rated the stock as a buy or above, while Seeking Alpha's quant ratings see it as a hold. The IRS has apologized to Ken Griffin, billionaire CEO of hedge fund Citadel, as well as thousands of other wealthy Americans, whose personal tax information was leaked to the press by a former IRS contractor named Charles Littlejohn, who is serving a five-year prison sentence, and exploited system loopholes to steal the income tax returns of people, including Tesla's Elon Musk, Amazon's Jeff Bezos, and even Donald Trump. The apology is part of a settlement with Griffin, who sued the IRS for neglecting to ensure safeguards for his private information. He withdrew the lawsuit on Monday. American International Group AIG has agreed to sell its global travel insurance and assistance business to Zurich Insurance Group for $600 million. The sale is expected to close by the end of 2024. On Tuesday, ExxonMobil said it may need to stop production at its refinery in Northern France, if striking workers continue to block access to the site. Blockade since Friday have prevented deliveries of goods and materials needed to maintain operations at the refinery, the company told Reuters. A group of workers called a strike last month after Exxon said it would shut down the refinery's steam cracker and stop making chemicals at the site, also known as Port Jerome this year. Exxon has said the site has lost more than 500 million euros since 2018 and remains uncompetitive. Nevertheless, the plant accounts for about 20% of France's refining capacity. Tuesday saw Google make a surprise announcement that moves their pixel reveal event to a spot earlier on the calendar. Originally slated for October, the event will now be held on August 13th. The US Surgeon General declared gun violence a public health crisis, noting that as of 2020, firearms are the leading cause of death for children and adolescents aged one to 19, surpassing car crashes, cancer, and drug overdoses. The landmark Surgeon General's advisory is the first such move highlighting the fatal consequences of firearms similar to its warning on cigarette smoking in the 1960s. The advisory noted that firearm-related deaths in the US reached a near three-decade high in 2021 and are significantly higher than other high-income countries. To combat the gun crisis, the Surgeon General called for a ban on assault weapons for civilian use, implementing universal background checks and policies governing who can carry a loaded firearm in public spaces and federally regulating the industry. Rivian Automotive soared 36% in post-market trading on Tuesday after the EV maker disclosed it intends to form a joint venture with Volkswagen to create next-gen electrical architecture and best-in-class software technology. As part of the partnership, Volkswagen will make a five-billion investment in Rivian. The partnership is anticipated to accelerate the development of software for Rivian and Volkswagen. The partnership is seen as allowing both companies to combine their complementary strengths and lower the cost per vehicle by increasing scale and speeding up innovation globally. Alphabet's autonomous driving unit Waymo has launched its commercial Robotaxi service for everyone in San Francisco, California. Waymo now provides more than 50,000 rides a week across three major urban areas with its ride-hailing Robotaxi service first launching in Phoenix, Arizona in 2020. The self-driving industry has been facing intense regulatory scrutiny because of multiple crashes involving vehicles of Waymo, GM's crews, and Amazon's zooks. US stock futures held steady on Wednesday after the S&P 500 and NASDAQ snapped a three-day losing streak amid a rebound in Nividia and other tech stocks. The Dow is up 0.03%, S&P 500 up 0.14%, and NASDAQ up 0.2%. Today, the Federal Reserve will release the results of its annual stress test after the close, which will determine the amount of capital that large banks will be required to set aside to help them weather financial shocks. The tests calculate each bank's stress capital buffer level. That, in turn, shows how much capital they'll be allowed to return to shareholders in the form of dividends and stock buybacks. Market participants are also awaiting the US PCE price index, the Federal Reserve's favored gauge of inflation, slated for release on Friday, which could provide further clues on the Fed's rate cut trajectory and China's industrial profits, as well as manufacturing and services PMIs. Bitcoin jumped more than 2% towards 62,000, rebounding from near two-month lows in a likely technical bounce, as buyers stepped in around the $60,000 level. And in the bond market, the US 10-year treasury yield was up four basis points at 4.2%. Look for links for stories in the show notes section. Don't forget, these episodes will be up with transcriptions at seekingalpha.com/wsme and join the elite community of real investors to unearth great investing ideas. Just head to seekingalpha.com/subscriptions. [BLANK_AUDIO]